The Secure and Fair Enforcement for Mortgage Licensing Act (“SAFE Act”) mandates that every state must license mortgage loan originators according to national standards. The minimum standards include criminal and credit background checks, pre-licensure education, pre-licensure testing, continuing education, and surety bonds. The SAFE Act was designed to enhance consumer protection and reduce fraud by establishing minimum standards for mortgage loan originators. All state licensed and federally registered mortgage loan originators must be registered with the Nationwide Mortgage Licensing System.
Many states differentiate between mortgage loan originators, mortgage loan servicers and mortgage loan brokers. There are additional classifications of licensing requirements for commercial versus residential loans. Furthermore, many state licenses are subject to annual reporting requirements to ensure ongoing compliance.
Businesses functioning without the proper license are generally penalized based on the size of the operation and the gravity of the offense.